Singapore Central Bank Ready To Try DeFi After Crypto Giants Leave for Dubai

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  • The Mon­e­tary Author­i­ty of Sin­ga­pore is part­ner­ing with JPMor­gan Chase to lead a pilot pro­gram explor­ing DeFi’s potential
  • Binance, Bybit and Crypto.com have all ini­ti­at­ed their moves from Sin­ga­pore to Dubai

The cen­tral bank of Sin­ga­pore is tap­ping JPMor­gan Chase to help lead a new blockchain pilot explor­ing the poten­tial of DeFi.

The upcom­ing tests are part of the Mon­e­tary Author­i­ty of Singapore’s (MAS) Project Guardian ini­tia­tive, which launched Tuesday.

Project Guardian aims to gauge whether DeFi (decen­tral­ized finance) appli­ca­tions run­ning on pub­lic blockchains, includ­ing Ethereum, can improve whole­sale bor­row­ing and lend­ing process­es with­out intro­duc­ing addi­tion­al, undue risk. The first step: tok­eniz­ing bonds and deposits, with smart con­tracts pow­er­ing trade executions. 

MAS also enlist­ed Sin­ga­pore­an multi­na­tion­al bank DBS – one of Asia’s largest finan­cial insti­tu­tions – along­side local dig­i­tal asset issuance start­up Mar­ketn­ode to co-lead the program.

Singapore’s Deputy Prime Min­is­ter Heng Swee Keat revealed the pilot at the launch of tech event Asia Tech x Sin­ga­pore Sum­mit on Tues­day. Heng, who also serves as coor­di­nat­ing min­is­ter for eco­nom­ic poli­cies, urged retail investors to steer clear of cryp­tocur­ren­cies — despite the government’s DeFi foray.

Accord­ing to The Straits Times, Heng said Sin­ga­pore must “pierce through both the hubris and the veil of sus­pi­cion” sur­round­ing dig­i­tal assets to ful­ly grasp the “poten­tial­ly trans­for­ma­tive under­ly­ing tech­nolo­gies.” In oth­er words: “blockchain, not bitcoin.”

The project intends to focus on dig­i­tal secu­ri­ties, or blockchain-pow­ered tokens backed by tra­di­tion­al finan­cial instru­ments. Singapore’s cen­tral bank, which dou­bles as the nation’s reg­u­la­to­ry author­i­ty on finance, will lever­age the pilot’s results to inform its cryp­to policymaking.

Crypto bigwigs already left Singapore for Dubai

While ini­tial indi­ca­tions are that MAS is open to using pub­lic (per­mis­sion­less) blockchains through­out Project Guardian, the tok­enized bonds and deposits will be deployed to a pri­vate (per­mis­sioned) liq­uid­i­ty pool for the pur­pos­es of the pilot. There’s poten­tial for dig­i­tal secu­ri­ties trade on local reg­u­lat­ed online exchanges at some point down the line.

Project Guardian diverges from a sim­i­lar – already live – DeFi ini­tia­tive man­aged direct­ly by JPMorgan. 

MAS wants to explore per­mis­sion­less sys­tems; JPMorgan’s Onyx Dig­i­tal Assets plat­form is pow­ered by a pri­vate blockchain that facil­i­tates the tok­eniza­tion and trad­ing of US Trea­surys with­in intra­day repur­chase, or repo, mar­kets — which are employed by hedge funds and oth­er asset man­agers look­ing to bor­row mon­ey at rea­son­able rates to fund big-tick­et orders. 

Block­works report­ed last week that French bank BNP Paribas had joined Onyx, which has so far processed more than $300 bil­lion of dig­i­tal tokens rep­re­sent­ing US Trea­surys since its Decem­ber 2020 launch.

In any case, it’s not clear whether the poten­tial for reg­u­la­to­ry clar­i­ty via Project Guardian will be enough to entice a selec­tion of crypto’s biggest names back to Singapore. 

Increased reg­u­la­to­ry scruti­ny and long wait times for cryp­to exchanges apply­ing for licens­es had cloud­ed hopes for Sin­ga­pore to become a glob­al hub for dig­i­tal assets, with the local­ized arm of the glob­al exchange Binance shut­ting down last December. 

Binance’s Sin­ga­pore affil­i­ate sup­port­ed the trad­ing of just eight cryp­tocur­ren­cies at the time, a frac­tion of the 100 dig­i­tal assets on Binance’s US plat­form, plus 600-odd tokens on its flag­ship exchange.

By March, Binance secured reg­u­la­to­ry approval to begin oper­at­ing in Dubai and quick­ly began look­ing to hire 100 new staffers in the region. Founder and CEO Chang­peng Zhao bought prop­er­ty in Dubai in the months prior.

Cryp­to deriv­a­tives plat­form Bybit relo­cat­ed its head­quar­ters from Sin­ga­pore to Dubai in April. Sin­ga­pore-based exchange Crypto.com like­wise recent­ly sig­naled the com­pa­ny plans to open its first Dubai out­post.
Long­time cryp­to hedge fund firm Three Arrows Cap­i­tal in April also pledged to move its head­quar­ters from Sin­ga­pore to Dubai. Co-founder Su Zhu cit­ed “elec­tric ener­gy” in Dubai’s dig­i­tal asset indus­try at the time.


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  • David Canel­lis

    Block­works

    Edi­tor

    David Canel­lis is an edi­tor and jour­nal­ist based in Ams­ter­dam who has cov­ered the cryp­to indus­try full time since 2018. He’s heav­i­ly focused on data-dri­ven report­ing to iden­ti­fy and map trends with­in the ecosys­tem, from bit­coin to DeFi, cryp­to stocks to NFTs and beyond. Con­tact David via email at [email pro­tect­ed]

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